Question
On July 1, 2012, Sagittarius Satellites issued $4,500,000 face value, 9%, 10-year bonds at $4,219,600. This price resulted in an effective-interest rate of 10% on
On July 1, 2012, Sagittarius Satellites issued $4,500,000 face value, 9%, 10-year bonds at $4,219,600. This price resulted in an effective-interest rate of 10% on the bonds. Sagittarius uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1. Instructions (Round all computations to the nearest dollar.)
(a) Prepare the journal entry to record the issuance of the bonds on July 1, 2012.
(b) Prepare an amortization table through December 31, 2013 (3 interest periods) for this bond issue.
(c) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2012.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started